Nigerian conglomerate Dangote on Monday officially upped its stake in South Africa’s Sephaku Cement to 64%.
Sephaku plans to bring an additional 2.2Mta of cement to the South African market by 2012/13, through the commissioning of two plants, one at Aganang in North West province and the other in Delmas in Mpumalanga province.
Footing the bigger part of the ZAR3.3bn bill and debt guarantees for these new plants will be Dangote, the largest cement company in Nigeria and now the majority stakeholder of Sephaku Cement.
To date, Dangote has supplied Sephaku with around R1,13-billion in equity, the largest-ever foreign direct investment from an African country into South Africa . This will provide the local cement company with a strong basis to raise the balance of the funding required through debt.
Speaking at a media briefing in Johannesburg, Sephaku CEO Pieter Fourie said that the company planned to fund the project on a 60:40 debt-to-equity ratio. "We believe that with Dangote also supplying the guarantees for raising the required funds through debt, local bankers will be more than willing to assist us in taking these projects forward."
Fourie commented that there was a definite need for a new player to enter the South African cement market.
"South Africa needs to grow its gross domestic product by at least 5% to 6%, and such growth will need cement and concrete, the two materials that are directly linked to economic development.